Amped up
Spotify is reportedly gearing up to introduce a new, more expensive, subscription tier internally dubbed "Supremium", according to recent reports from Bloomberg.
The new offering is expected to include a HiFi feature — which had been delayed following Apple Music and Amazon Music's decision to offer it for free as part of their standard plans — and premium subscribers may also get access to some audiobooks in future as well.
Spotify execs will be hoping that the new features convince more of their free users to convert to paying subscribers. Indeed, while just ~40% of Spotify's user base opts for the paid option, it's that segment that sustains the company, accounting for a staggering 97% of the company’s cumulative gross profit since 2017. The ad-supported option, where users endure 15-30 second advertisements every few songs, hardly contributes to the company’s bottom line, covering its basic costs while acting more like a marketing funnel for the premium service.
Podcasting pivot
The ad-supported part of Spotify’s business also includes its podcast efforts — which have been scaled back dramatically, with 200 employees from its podcast division being laid off just 2 weeks ago. The company’s strategy around “Spotify Originals” has also shifted; a new show with Trevor Noah will no longer be exclusive to Spotify and the company has also parted ways with Prince Harry and Meghan, following their lucrative podcast deal in 2020, which was valued at $20m.
Related chart: have we hit peak podcast?
